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https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_actual_cost_cutting_letter_for_tesla/ https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_a...

by dd36 7y ago

JohnJamesRambo 7y ago
Yikes. It’s bizarre that they just now realize this and implement it. Reminds me of something a teenager would do at the last possible minute before something bad happens.
- hi5eyes 7y ago
  look up elons promises of battery swaps, 35k m3, 2020 roadster, "full self driving", and the closing of stores but then cancelling that and teslas solarcity/solar shingles shitshow i want to remind everyone.. any mention of "self driving" is a scam, fraud. on a site like hackernews im still surprised the teslemmings are still regurgitating this idea
  - TAForObvReasons 7y ago
    Irrespective of the technical merits, a significant portion of the HN user base likely invested in $TSLA years ago and are financially incentivized to support all of Musk's claims, even if they wouldn't support the outlandish claims normally.
    - goatherders 7y ago
      There is no evidence at all for the assertion that "a significant portion of the HN user" base is invested in anything.
      - jjeaff 7y ago
        Considering that a large portion of HN readers are technical and data driven, I would think/hope that they are not invested in individual stocks with any significant amount of their net worth and are instead taking the approach that the data bears out which is to invest in low fee index funds.
        unityByFreedom 7y ago
        I suspect those invested one way or another will be more vocal.
- davej 7y ago
  I didn’t read it like that. I read it more like... yes, we just got some money from investors but the drive for profitability is still a huge priority.
  - TAForObvReasons 7y ago
    This type of belt tightening message also usually predates a mass layoff
- deleted 7y ago
  [deleted]
whyenot 7y ago
Your link is to what is represented as the authentic text of the memo. If genuine, to me, this seem like the most important bit: "It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month. Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable. That is a lot of money, but actually only gives us approximately ten months at the first-quarter burn rate to achieve breakeven. It’s vital that we respect the faith investors have shown in Tesla, but it will require great effort to do so." With relatively low gas prices at the moment, decreasing federal subsidies for electric cars, and more players entering the market, it seems like Tesla is in a pretty tough spot.
- charlesdm 7y ago
  > With relatively low gas prices at the moment, decreasing federal subsidies for electric cars, and more players entering the market, it seems like Tesla is in a pretty tough spot. Nothing you couldn't see coming 5 years ago, however.
  - asaph 7y ago
    To be fair, the current competition is largely a reaction to Tesla's accomplishments.
    - rayiner 7y ago
      I question that CW. If that were true, the competitors would be making sporty sedans like Tesla. But almost none are. The competitors—the Bolt, Kona, etc., are all totally different form factors. The alternative, potentially better, theory is that everyone is reacting to the same incentives and market structures. Governments are pushing electric vehicles through subsidies and mandates. Meanwhile, exploding use of portable electronics has led to massive improvements lithium ion battery technology. Tesla has targeted a flashy niche market, expensive sports sedans, but has largely avoided trying to compete in the markets where the sales really are: crossovers and SUVs. (Every year, Toyota sells as many RAV4s as all the vehicles Tesla has ever sold.)
Matt3o12_ 7y ago
A bit later in the thread the poster also states a pretty good explanation: > A lot of FUD from the media said Elon stated they will only have 10 months left before cash balance is zero. No where in this letter stated such a thing and Elon just used an arbitrary number(in this case the newly raised capital) to express the point that 2.4 billion may seem like a lot of money, but we shouldn't take it for granted. In fact their cash balance is most likely over 4 billion. > This letter to me shows the maturity of a company. Elon is telling his team that just because I can raise 2.4 billion whenever I want doesn't mean money is falling from the sky. Everyone must continue to be vigilant about cost cutting, and we must prove to our investors that we will take cost cutting seriously. > From Q1 conference call, Elon alluded that the reason why he is against raising capital all the time is because he wants to focus on cost cutting as the primary objective. So his letter does not seem anything out of the ordinary. > So no, the sky is not falling. > https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_actual_cost_cutting_letter_for_tesla/eo16fcy/ https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_a... So it sounds to me that Elon musk does not want Tesla to burn money like Uber. He says they most certainly could, but he would rather focus on cost cutting. This seems to be a very mature reaction, something every mature company does. This makes Tesla less and less like a startup and more like a mature company. Granted, they are not there yet but I believe they could be there very soon. Elon Musk also always makes things “hardcore”, or more extreme then a normal company would do. Instead of cost cutting over years, he wants it done fast but might underestimate the time it actually takes to achieve his goal. We have seen that move from him many times, when a released the model 3, he gave a very very optimistic release timeline. While he missed it, it was still a lot faster then his original plan to release it in 2020 and still faster then a lot people estimated. While this doesn’t always work out (like his autopilot goals), by setting such hard goals and deadlines, things move much faster then they normally would. Only time can tell if his cost cutting plan actually works but he has shown that such extreme actions can often lead to much better results because everyone wakes up and doesn’t just put it on goals for the next 3 to 5 years list. That being said, I am not really worried about Tesla. They have shown that they are able to get a lot more money if necessary and their demand is still going strong. The competition doesn’t look very promising (the audi E-Tron is often compared to the 2013 model S, and while it is most certainly superior in some aspects, I believe Tesla is still a few years ahead from the competition).

https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_actual_cost_cutting_letter_for_tesla/ https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_a...

by dd36 7y ago

https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_actual_cost_cutting_letter_for_tesla/ https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_a...

JohnJamesRambo 7y ago

Yikes. It’s bizarre that they just now realize this and implement it. Reminds me of something a teenager would do at the last possible minute before something bad happens.

hi5eyes 7y ago
look up elons promises of battery swaps, 35k m3, 2020 roadster, "full self driving", and the closing of stores but then cancelling that and teslas solarcity/solar shingles shitshow i want to remind everyone.. any mention of "self driving" is a scam, fraud. on a site like hackernews im still surprised the teslemmings are still regurgitating this idea
- TAForObvReasons 7y ago
  Irrespective of the technical merits, a significant portion of the HN user base likely invested in $TSLA years ago and are financially incentivized to support all of Musk's claims, even if they wouldn't support the outlandish claims normally.
  - goatherders 7y ago
    There is no evidence at all for the assertion that "a significant portion of the HN user" base is invested in anything.
    - jjeaff 7y ago
      Considering that a large portion of HN readers are technical and data driven, I would think/hope that they are not invested in individual stocks with any significant amount of their net worth and are instead taking the approach that the data bears out which is to invest in low fee index funds.
      - unityByFreedom 7y ago
        I suspect those invested one way or another will be more vocal.
davej 7y ago
I didn’t read it like that. I read it more like... yes, we just got some money from investors but the drive for profitability is still a huge priority.
- TAForObvReasons 7y ago
  This type of belt tightening message also usually predates a mass layoff
deleted 7y ago
[deleted]

whyenot 7y ago

Your link is to what is represented as the authentic text of the memo. If genuine, to me, this seem like the most important bit: "It is important to bear in mind that we lost $700 million in the first quarter this year, which is over $200 million per month. Investors nonetheless were supportive of our efforts and agreed to give us $2.4 billion (our net proceeds) to show that we can be financially sustainable. That is a lot of money, but actually only gives us approximately ten months at the first-quarter burn rate to achieve breakeven. It’s vital that we respect the faith investors have shown in Tesla, but it will require great effort to do so." With relatively low gas prices at the moment, decreasing federal subsidies for electric cars, and more players entering the market, it seems like Tesla is in a pretty tough spot.

charlesdm 7y ago
> With relatively low gas prices at the moment, decreasing federal subsidies for electric cars, and more players entering the market, it seems like Tesla is in a pretty tough spot. Nothing you couldn't see coming 5 years ago, however.
- asaph 7y ago
  To be fair, the current competition is largely a reaction to Tesla's accomplishments.
  - rayiner 7y ago
    I question that CW. If that were true, the competitors would be making sporty sedans like Tesla. But almost none are. The competitors—the Bolt, Kona, etc., are all totally different form factors. The alternative, potentially better, theory is that everyone is reacting to the same incentives and market structures. Governments are pushing electric vehicles through subsidies and mandates. Meanwhile, exploding use of portable electronics has led to massive improvements lithium ion battery technology. Tesla has targeted a flashy niche market, expensive sports sedans, but has largely avoided trying to compete in the markets where the sales really are: crossovers and SUVs. (Every year, Toyota sells as many RAV4s as all the vehicles Tesla has ever sold.)

Matt3o12_ 7y ago

A bit later in the thread the poster also states a pretty good explanation: > A lot of FUD from the media said Elon stated they will only have 10 months left before cash balance is zero. No where in this letter stated such a thing and Elon just used an arbitrary number(in this case the newly raised capital) to express the point that 2.4 billion may seem like a lot of money, but we shouldn't take it for granted. In fact their cash balance is most likely over 4 billion. > This letter to me shows the maturity of a company. Elon is telling his team that just because I can raise 2.4 billion whenever I want doesn't mean money is falling from the sky. Everyone must continue to be vigilant about cost cutting, and we must prove to our investors that we will take cost cutting seriously. > From Q1 conference call, Elon alluded that the reason why he is against raising capital all the time is because he wants to focus on cost cutting as the primary objective. So his letter does not seem anything out of the ordinary. > So no, the sky is not falling. > https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_actual_cost_cutting_letter_for_tesla/eo16fcy/ https://www.reddit.com/r/teslamotors/comments/bq50s8/elons_a... So it sounds to me that Elon musk does not want Tesla to burn money like Uber. He says they most certainly could, but he would rather focus on cost cutting. This seems to be a very mature reaction, something every mature company does. This makes Tesla less and less like a startup and more like a mature company. Granted, they are not there yet but I believe they could be there very soon. Elon Musk also always makes things “hardcore”, or more extreme then a normal company would do. Instead of cost cutting over years, he wants it done fast but might underestimate the time it actually takes to achieve his goal. We have seen that move from him many times, when a released the model 3, he gave a very very optimistic release timeline. While he missed it, it was still a lot faster then his original plan to release it in 2020 and still faster then a lot people estimated. While this doesn’t always work out (like his autopilot goals), by setting such hard goals and deadlines, things move much faster then they normally would. Only time can tell if his cost cutting plan actually works but he has shown that such extreme actions can often lead to much better results because everyone wakes up and doesn’t just put it on goals for the next 3 to 5 years list. That being said, I am not really worried about Tesla. They have shown that they are able to get a lot more money if necessary and their demand is still going strong. The competition doesn’t look very promising (the audi E-Tron is often compared to the 2013 model S, and while it is most certainly superior in some aspects, I believe Tesla is still a few years ahead from the competition).